Drug giant MSD expects the imminent loss of patent exclusivity on diabetes drug Januvia and other medicines to hit harder than analysts are projecting. The comapny on Tuesday forecast 2026 sales and profits below Wall Street estimates.
The weaker-than-anticipated outlook overshadowed fourth-quarter results of the drugmaker, known in its US home market as Merck, that beat profit and sales expectations, driven by strong demand for its blockbuster cancer immunotherapy Keytruda, for which the group’s Swords plant is one of the primary producers.
The company expects 2026 revenue of $65.5 billion to $67 billion (€55.5-€56.8 billion), with the higher end of the range falling short of the average analyst estimate of $67.6 billion, according to LSEG data.
While the fourth-quarter results “build a reasonable foundation for MSD/Merck heading into 2026”, a lower-than-expected revenue outlook may temper expectations for the year, said BMO Capital analyst Evan Seigerman.
MSD said it expects a $2.5 billion impact this year, including from generic competition, Medicare price negotiations and weaker sales of its Covid-19 treatment, Lagevrio.
“Where the disconnect is coming with [Wall] Street, frankly, is in a lot of our legacy products, and these are products that are all largely going off patent,” chief executive, Rob Davis said in an interview. “As I look at the strategic drivers of this company, I’m actually very confident.”
He said the drugs that would be weaker than analysts are expecting include Januvia and related medicines Janumet and Janumet XR, as well as Bridion, an injection that reverses the effect of muscle-blocking drugs at the end of surgery. Analysts were already expecting significant sales drop-offs from both.
The new Medicare price for Januvia - negotiated under former President Joe Biden’s Inflation Reduction Act - could also hurt its sales more than analysts were estimating.
The softness in the 2026 outlook is “a cause for concern”, Bernstein analyst Courtney Breen said, adding that at least some of the generic erosion is already reflected in Wall Street estimates.
MSD reported an adjusted profit of $2.04 per share for the quarter, ahead of analysts’ estimate of $2.01.
It posted fourth-quarter sales of $16.4 billion, topping Wall Street estimates of $16.2 billion, marking a 5 per cent increase from the same period a year earlier.
The sales growth was primarily fueled by Keytruda, with sales up 7 per cent to $8.37 billion, surpassing analysts’ expectations of $8.23 billion. For the year, Keytruda sales were $31.7 billion.
That performance helped offset a steep 34 per cent year-over-year plunge in sales for its human papillomavirus vaccine, Gardasil, which came in at $1.03 billion for the quarter. The company has been dealing with weak demand for that vaccine in China that led it to halt shipments of the shot there.
MSD struck two deals in the $10 billion range in 2025, buying Cidara Therapeutics and Verona Pharma in order to pick up new drugs before Keytruda, the world’s top-selling prescription medicine, loses patent protection later this decade.
Davis said the company will continue to look for deals for oncology, cardiometabolic and immunology treatments.
“We continue to be in that $1 billion to $15 billion sweet spot, but as we’ve always said, we’re willing to go bigger if we see a scientific opportunity that brings value,” he said.
— Reuters
